November 21, 2019

USDCAD open 1.3300-04 (6:00 am EST)    Overnight Range 1.3297-1.3320

BoC Governor Stephen Polozis having a “Fireside Chat” about “Economic change and the path forward” with the Ontario Securities Institute.  The remarks won’t be published

FX currency moves lacked conviction overnight thanks to conflicting signals around the US/China trade talks and the release of the FOMC minutes which were a “non-event.”

The US dollar opened unchanged to a tad softer in New York, today.

FX Market Snapshot

Change in currency value against the US dollar from NY close to NY open

Source: Saxo Bank/IFXA

The FOMC minutes didn’t offer anything that wasn’t already known or discussed, in post-meeting speeches by Fed Chair Powell and various officials. The minutes appeared to confirm that US interest rates are likely to remain unchanged unless there is a sharp economic slowdown.

The US dollar was modestly weaker after the minutes were digested, but traders focus quickly shifted to the US/China trade talks. Yesterday, Trump complained that China wasn’t making enough concessions to warrant a deal.  There were plenty of rumours that a Phase 1 deal would be delayed until 2020 because Congress passed the HK Human Rights and Democracy Act, which President Trump is expected to sign into law, shortly.

Negative trade talks sentiment turned positive in Europe after the Chinese Ministry of Commerce spokesman Gao Feng said China would try hard to reach a Phase 1 deal.

EURUSD traded in a 1.1050-1.1088 range since yesterday. It has a modestly bullish bias, supported by the latest trade talks developments and technicals targeting 1.1150 while prices are above 1.1050.

GBPUSD tracked EURUSD moves. Traders are unwilling to get too involved ahead of the December 12 election.

USDJPY dropped to 108.28 from 108.67 after the FOMC minutes were released. Those losses were recovered overnight on the back of the latest positive spin to the trade talks. However, falling 10-year US Treasury yields, which have dropped from 1.845% on Monday to 1.721% overnight, are capping gains.

AUDUSD and NZDUSD bopped and weaved inside narrow ranges with trade sentiment shifting with every trade headline.

Oil prices surged from yesterday’s $54.72/barrel low to $57.37/b, yesterday when EIA reported weekly crude stock supplies did not rise as much as expected. Prices managed to hang on to most of those gains on hopes for the signing of a Phase 1 trade deal.

USDCAD rallied after Thursday’s CPI report which was as expected but showed Core CPI (1.9%) a tad below the BoC forecast. Traders immediately concluded that the results raised the odds for an interest rate cut in January, and USDCAD rallied from 1.3267 to 1.3324. The rally ran out of steam and prices consolidated overnight.

Today’s US data includes Jobless Claims, Philadelphia Fed Manufacturing Index, and Existing Home Sales.

USDCAD Technical View

The intraday USDCAD technicals are bullish while prices are above 1.3290, looking for a break of downtrend resistance at 1.3230 and Fibonacci resistance at 1.3353 to extend gains to 1.3430.  A break below 1.3250 targets 1.3220. For today, USDCAD support is at 1.3290 and 1.3250.  Resistance is at 1.3320 and 1.3360.  Today’s Range 1.3290-1.3360

Chart: USDCAD 4 hour